Climate awareness in management and deviation from target leverage: Evidence from China

Rufei Ma, Xinxin Fu, Qiang Ji and Pengxiang Zhai

Finance Research Letters, 2025, vol. 76, issue C

Abstract: We explore the impact of managerial climate attention on leverage deviation (i.e., the distance between actual leverage and the target leverage). The results show that greater managerial attention to climate issues is associated with smaller deviations from target leverage in the future, indicating that managers concerning climate issues tend to achieve a more optimized capital structure. This effect is robust to potential leverage measure bias, confounding effect of external crisis, and sample selection bias. Moreover, this effect is more pronounced in firms with concentrated ownership, significant institutional holdings, and government ownership, emphasizing the critical role that ownership structure plays in this relationship.

Keywords: Climate change; Managerial attention; Target leverage; Ownership structure (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325001795

DOI: 10.1016/j.frl.2025.106915

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